BILL NUMBER: SB 1466	CHAPTERED  07/10/00

	CHAPTER   122
	FILED WITH SECRETARY OF STATE   JULY 10, 2000
	APPROVED BY GOVERNOR   JULY 7, 2000
	PASSED THE ASSEMBLY   JUNE 26, 2000
	PASSED THE SENATE   MAY 24, 2000
	AMENDED IN SENATE   MAY 3, 2000
	AMENDED IN SENATE   APRIL 4, 2000

INTRODUCED BY   Senator Leslie

                        FEBRUARY 9, 2000

   An act to amend Section 4406 of the Commercial Code, relating to
financial institutions.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1466, Leslie.   Banking transactions.
   Existing law requires a depository institution to provide periodic
account statements to its customers and requires that the depository
institution either return or make available items paid from the
account, or provide information in the statement sufficient to allow
the customer reasonably to identify the items paid, including, for
example, the item number, the amount, and the date the item was paid.
  The alternative provision of listing the information sufficient to
identify the items paid will cease to be operative on January 1,
2001.
   This bill would extend the operation of that alternative provision
until January 1, 2005.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 4406 of the Commercial Code, as amended by
Section 13 of Chapter 442 of the Statutes of 1997, is amended to
read:
   4406.  (a) A bank that sends or makes available to a customer a
statement of account showing payment of items for the account shall
either return or make available to the customer the items paid or
provide information in the statement of account sufficient to allow
the customer reasonably to identify the items paid.  The statement of
account provides sufficient information if the item is described by
item number, amount, and date of payment.  If the bank does not
return the items, it shall provide in the statement of account the
telephone number that the customer may call to request an item or a
legible copy thereof pursuant to subdivision (b).
   (b) If the items are not returned to the customer, the person
retaining the items shall either retain the items or, if the items
are destroyed, maintain the capacity to furnish legible copies of the
items until the expiration of seven years after receipt of the
items.  A customer may request an item from the bank that paid the
item, and that bank shall provide in a reasonable time either the
item or, if the item has been destroyed or is not otherwise
obtainable, a legible copy of the item.  A bank shall provide, upon
request and without charge to the customer, at least two items or a
legible copy thereof with respect to each statement of account sent
to the customer.
   (c) If a bank sends or makes available a statement of account or
items pursuant to subdivision (a), the customer shall exercise
reasonable promptness in examining the statement or the items to
determine whether any payment was not authorized because of an
alteration of an item or because a purported signature by or on
behalf of the customer was not authorized.  If, based on the
statement or items provided, the customer should reasonably have
discovered the unauthorized payment, the customer shall promptly
notify the bank of the relevant facts.
   (d) If the bank proves that the customer failed, with respect to
an item, to comply with the duties imposed on the customer by
subdivision (c), the customer is precluded from asserting any of the
following against the bank:
   (1) The customer's unauthorized signature or any alteration on the
item if the bank also proves that it suffered a loss by reason of
the failure.
   (2) The customer's unauthorized signature or alteration by the
same wrongdoer on any other item paid in good faith by the bank if
the payment was made before the bank received notice from the
customer of the unauthorized signature or alteration and after the
customer had been afforded a reasonable period of time, not exceeding
30 days, in which to examine the item or statement of account and
notify the bank.
   (e) If subdivision (d) applies and the customer proves that the
bank failed to exercise ordinary care in paying the item and that the
failure contributed to loss, the loss is allocated between the
customer precluded and the bank asserting the preclusion according to
the extent to which the failure of the customer to comply with
subdivision (c) and the failure of the bank to exercise ordinary care
contributed to the loss.  If the customer proves that the bank did
not pay the item in good faith, the preclusion under subdivision (d)
does not apply.
   (f) Without regard to care or lack of care of either the customer
or the bank, a customer who does not within one year after the
statement or items are made available to the customer (subdivision
(a)) discover and report the customer's unauthorized signature on or
any alteration on the item is precluded from asserting against the
bank the unauthorized signature or alteration.  If there is a
preclusion under this subdivision, the payer bank may not recover for
breach of warranty under Section 4208 with respect to the
unauthorized signature or alteration to which the preclusion applies.

   (g) This section shall remain in effect only until January 1,
2005, and as of that date is repealed, unless a later enacted
statute, which is enacted before January 1, 2005, deletes or extends
that date.
  SEC. 2.  Section 4406 of the Commercial Code, as amended by Section
14 of Chapter 442 of the Statutes of 1997, is amended to read:
   4406.  (a) A bank that sends or makes available to a customer a
statement of account showing payment of items for the account shall
either return or make available to the customer the items paid or
provide information in the statement of account sufficient to allow
the customer to identify the items paid.  If the bank does not return
the items, it shall provide in the statement of account the
telephone number that the customer may call to request an item or a
legible copy thereof pursuant to subdivision (b).
   (b) If the items are not returned to the customer, the person
retaining the items shall either retain the items or, if the items
are destroyed, maintain the capacity to furnish legible copies of the
items until the expiration of seven years after receipt of the
items.  A customer may request an item from the bank that paid the
item, and that bank shall provide in a reasonable time either the
item or, if the item has been destroyed or is not otherwise
obtainable, a legible copy of the item.  A bank shall provide, upon
request and without charge to the customer, at least two items or a
legible copy thereof with respect to each statement of account sent
to the customer.
   (c) If a bank sends or makes available a statement of account or
items pursuant to subdivision (a), the customer shall exercise
reasonable promptness in examining the statement or the items to
determine whether any payment was not authorized because of an
alteration of an item or because a purported signature by or on
behalf of the customer was not authorized.  If, based on the
statement or items provided, the customer should reasonably have
discovered the unauthorized payment, the customer shall promptly
notify the bank of the relevant facts.
   (d) If the bank proves that the customer failed, with respect to
an item, to comply with the duties imposed on the customer by
subdivision (c), the customer is precluded from asserting any of the
following against the bank:
   (1) The customer's unauthorized signature or any alteration on the
item if the bank also proves that it suffered a loss by reason of
the failure.
   (2) The customer's unauthorized signature or alteration by the
same wrongdoer on any other item paid in good faith by the bank if
the payment was made before the bank received notice from the
customer of the unauthorized signature or alteration and after the
customer had been afforded a reasonable period of time, not exceeding
30 days, in which to examine the item or statement of account and
notify the bank.
   (e) If subdivision (d) applies and the customer proves that the
bank failed to exercise ordinary care in paying the item and that the
failure contributed to loss, the loss is allocated between the
customer precluded and the bank asserting the preclusion according to
the extent to which the failure of the customer to comply with
subdivision (c) and the failure of the bank to exercise ordinary care
contributed to the loss.  If the customer proves that the bank did
not pay the item in good faith, the preclusion under subdivision (d)
does not apply.
   (f) Without regard to care or lack of care of either the customer
or the bank, a customer who does not within one year after the
statement or items are made available to the customer (subdivision
(a)) discover and report the customer's unauthorized signature on or
any alteration on the item is precluded from asserting against the
bank the unauthorized signature or alteration.  If there is a
preclusion under this subdivision, the payer bank may not recover for
breach of warranty under Section 4208 with respect to the
unauthorized signature or alteration to which the preclusion applies.

   (g) This section shall become operative on January 1, 2005.
